So you’re ready to buy a house… Most buyers’ plan is to save as much as they can for a down payment, without necessarily realizing that closing costs are included. In my experience, people tend to sometimes be surprised and annoyed by closing costs because they don’t really know what they are. Closing costs are the fees you pay before becoming the official legal owner of a property. They can vary depending on the total purchase price of the property, as well as how it is being financed.
In other words, closing costs are the monies needed to complete your transaction. What do closing costs cover? They can vary by location and situation, but generally speaking, closing costs include:
- Government recording costs
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Underwriting fees
These costs are typically between 2-5% of the total purchase price of the property. It is best to keep them in mind, plan early, and keep them in your budget so you are not caught off guard by them in the end. I know some get annoyed by them, but most are legit and ensure that you’re purchasing a home in a safe and affordable fashion.